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Suspension lifted for DoD propaganda contractor

Dec. 31, 2012 - 05:30PM   |   Last Updated: Dec. 31, 2012 - 05:30PM  |  
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WASHINGTON — The Army has lifted its suspension of the owner of its top propaganda contractor in Afghanistan, despite the Pentagon's ongoing criminal investigation against him for late tax payments, treatment of his Afghan employees and an online smear campaign he launched against USA Today.

The Army had suspended Camille Chidiac, co-owner of Leonie Industries, in May after he admitted to setting up disparaging social media and web sites against two journalists from USA Today. At the time, Defense Secretary Leon Panetta ordered "appropriate action" taken against Chidiac, according to Pentagon press secretary George Little, who called Chidiac's ctions "intolerable."

The Army reversed the suspension Nov. 15, allowing Chidiac to bid for new federal contracts, including an extension of the propaganda contract in January. The Army, in a statement from spokesman Matthew Bourke, decided that Chidiac should be reinstated because the Army concluded that he conducted the smear campaign on his own time without Leonie's resources. Chidiac put his ownership stake in a trust in an agreement reached with the Army. That prompted the Army to lift its suspension of Chidiac, according to Bourke.

On Dec. 14, USA Today incorrectly reported that Chidiac remained on the list of suspended contractors. That was based on a federal database of suspended contractors and interviews with military spokesmen.

The Army refused to provide copies of its investigation or the agreement. Retired Lt. Gen. Scott Black joined Leonie's board of directors as part of the deal, according to company spokesman Gar Smith.

Rep. Hank Johnson, a Georgia Democrat and member of the House Armed Services Committee, called the Army's decision to reinstate Chidiac premature.

"Mr. Chidiac has already admitted to smearing journalists who investigated his company, a major defense contractor," Johnson said. "The inspector general's investigation should be completed before allowing them to bid on any contracts. This case cries out for congressional oversight and investigation."

Scott Amey, general counsel for the watchdog group Project on Government Oversight, said the suspension appears to have been nothing more than an attempt to deflect criticism from the Army and renders its threat of suspension meaningless.

"Once again, the timing of the government's action to lift the suspension leaves us wondering if the suspension and debarment process is valid or nothing more than a public relations stunt," Amey said. "Suspensions have lasted days or have been lifted just prior to the next contract — it's one thing to promote competition, it's another thing to let contractors off the hook every time the government buys the next round of goods and services."

The Pentagon's Defense Criminal Investigative Service has an ongoing investigation of Leonie Industries. That investigation followed a USA Today story in February that found the owners of the company had failed to pay $4 million in taxes on time. They paid their taxes weeks after the story ran. The inspector general's office also has informed Congress that it would examine the misinformation campaign.

Chidiac, who owns 49 percent of the California-based company, admitted that he had established some websites that targeted USA Today journalists. Leonie officials maintained that Chidiac did not use company resources in the reputation attacks.

In June, the Pentagon retained Leonie for another year at the cost of $60 million. The company produces leaflets and broadcasts urging Afghans to support their government and eschew the Taliban. Leonie has received at least $120 million in Pentagon contracts since 2009.

An Army "information paper" on the Leonie retention obtained by USA Today said rebidding the contract would take three to four months, and it would cost an $500,000 to make the transition for Leonie to another contractor if it was changed early.

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